3 financial facts about Pennsylvania’s 2026-27 budget

Pennsylvania’s 2026-27 state budget, which clocks in at a little north of $50.8 billion, has received praise from lawmakers on both sides of the aisle, who have hailed it as a product of compromise. And while the budget is balanced on paper, that’s due in part to some wonky, budgetary maneuvers employed in this year’s deal. 

Lawmakers were also able to reclaim more than $4.5 billion in lapsed funding from prior-year budgets, and avoid using money from the state’s Rainy Day Fund, despite worries that the state would have to dip into its financial reserves. 

Below, City & State highlights three financial facts from the 2026-27 state budget adopted by lawmakers this month.

The budget includes two “cycle rolls”

With the commonwealth facing a structural budget deficit, lawmakers got creative in this year’s cycle to make sure that the state’s budget is balanced –  at least on paper. The $50.8 billion budget includes two so-called cycle rolls, or delayed monthly payments of $1.32 billion that will defer spending into the future. 

The cycle rolls apply to two Department of Human Services payments – one in fiscal year 2025-26 and one in fiscal year 2026-27 – that provide the state with $2.64 billion in temporary, one-time savings, according to an analysis by the state’s Independent Fiscal Office. 

The Rainy Day Fund is expected to accrue $350M in interest

Despite the fact that Gov. Josh Shapiro’s executive budget proposal called for using $4.5 billion from the state's Rainy Day Fund to the budget, the budget deal reached by Shapiro and lawmakers ultimately doesn’t touch the fund, also known as the Budget Stabilization Reserve Fund. 

The IFO estimates that the two cycle rolls included in the budget package will ultimately allow the fund to accrue roughly $350 million in interest. 

The structural deficit is reduced by $520 million

Back in May, the IFO estimated that the state would have a structural deficit of $5.56 billion based on Shapiro’s executive budget proposal. With a budget now in place, the office found that appropriations in the adopted budget will reduce the $5.56 billion deficit by $0.52 billion, bringing the state’s structural deficit to just over $5 billion for the 2026-27 fiscal year. 

That reduction, per the IFO, can be credited to lower spending costs in executive departments, including a $235 million reduction for the Department of Human Services and a $109 million reduction in funding for the Department of Corrections related to the closure of state prisons.